The App-Based Battleground

California and Seattle are the latest battlegrounds for lawsuits involving ride-hailing apps Uber and Lyft. As the gig economy expands, the definitions of job and employee are growing with it. However, the business model of the gig economy can be particularly daunting for their independent contractors-those of who are usually not subject to certain benefits, like workers’ compensation, bargaining rights, unemployment insurance, and the like. The industrys’ near-complete deregulation makes it easy to find work and make money, but consequently makes it hard to be protected from poor business practices.

“Seattle’s law, passed in 2015, requires the city to select a union as the exclusive bargaining representative of the estimated 9,000 drivers in Seattle who work for Uber, Lyft and other services. The law was put on hold pending the outcome of the chamber’s lawsuit”, according to an article on Reuters.com, linked below. While Washington state allows their cities, such as Seattle, to regulate Uber and Lyft, the 9th circuit court took issue with which part of the ride fees were regulated. The courts are allowing the challenge by business groups,

However, in California, the Supreme Court has passed a decision that makes it harder for businesses to “classify workers as independent contractors rather than employees.”, according to the New York Times. The decision could “upend their business models”, mandating minimum wage, overtime, workers’ compensation, unemployment insurance, etc. laws to be followed by companies. The law creates a simpler definition of employee and independent contractor, by way of substituting the current “test” for another, more streamlined one. This test would be based on someone completing tasks relevant to the business of the company, rather than degree of supervision and other contingencies that currently determine employee status. As the New York Times describes this new test;

“By way of an example, the court said a plumber hired by a store to fix a bathroom leak would not reasonably be considered an employee of that store. But seamstresses sewing at home using materials provided by a clothing manufacturer would probably be considered employees.

In addition, a company must show that it does not control and direct the worker, and that the worker is truly an independent business operator, not just classified that way unilaterally.”

On display in either case is the standard mentality of “safety of workers is a hindrance to businesses.” This has been a hot-button labor topic for the past few years: for-hire drivers demanding protection and benefits. New York City’s’ Black Car Fund was established for this very reason. However, this was before the integration of app-based transportation. This is not the first time Uber and Lyft have been at the crux of these issues. A class-action lawsuit that came about in late 2017 stated that Lyft was docking twice the amount of the Black Car Fund fee (2.5%) from for-hire drivers-once for the fee paid by drivers, and once from the drivers’ actual paychecks. The company ultimately settled for $3 million earlier this year.

U.S. court revives challenge to Seattle’s Uber, Lyft union law

Gig Economy Business Model Dealt a Blow in California Ruling

Dynamex Operations West, Inc. v. Superior Court

The Black Car Fund; NPR Podcast

Lyft faces lawsuit over workers comp fees

 

 

Industries with growing union membership

Labor unions have a long history in public works and trades. Typically unions are made up of police officers, fire fighters, sanitation, electricians, construction workers, the health industry, and the like. However, recently there are a variety of industries with employees voting to unionize. Their reasons for voting to unionize are all unique to the industry, but nonetheless highlight the fact that employees want to change their work environment.

Airline crews:

Earlier this month, over half of JetBlue’s 5,000 flight attendants voted to unionize. They are now part of a union that is near and dear to New York’s heart, the Transport Workers Union. This is the second union to be brought in to JetBlue since its first union in 2014, the Air Line Pilots Association.

An article on Bloomberg.com sited job security from mergers as one of the reasons the flight attendants had voted to unionize, as well as having a voice in lobbying matters in the aviation industry. TWU President John Samuelsen said of the vote, “This historic victory is yet another example of the tide turning in America as workers continue to lock arms and fight back to defend their livelihoods,” according to Forbes.

JetBlue is following suit with one of countries most heavily unionized industries, with some airlines having more than 4 unions supporting their employees.

Education:

Student workers, usually holding the title of Adjunct Professor or Research Assistant, have a long history of trying to unionize in private institutions. After taking on the lion’s share of research work and instruction, they are typically left with low wages, heavy overtime and a lack of job security.

Harvard students recently voted to unionize and won the right to bargain with the school. According to the prestigious college’s website, this is the first time in the history of Harvard that the students will have a union. Harvard’s decision to negotiate with graduate student workers is out of step with other ivy league colleges, such as Yale and Columbia, who have refused to do so when their students vote to unionize. The union, HGU, is represented by the United Automobile Workers and is now the HGU-UAW.

Journalists/Freelance Writers:

Several online media publications have voted become members of the Writers Guild of America East. Employees from Thrillist, Vox, Vice, and MTV News make up just a number of the roughly 5,000 union members that WGAE represents. Unique to an industry based in the arts, unionizing also means the protection of the work they generate for the publications-for example, the recent settling of a 17-year-old- class action lawsuit claiming copyright infringement brought forth by 3,000 journalists. Similar to the airline industry, mergers and acquisitions that could put freelance positions at risk are also a reason employees are voted to unionize. Most recently, 85% of employees from the Chicago Tribune have voted to unionize. This is still pending approval from parent company, Tronc according to an article on Politico posted in late April.

For-Hire Transportation:

Not unlike their yellow, green, and livery forefathers, for-hire transportation services have begun to unionize. With the ease of a mobile app, Uber and Lyft created quick income for the drivers and quick transportation for the users. After feeling abused under the employment status of independent contractors, the Independent Drivers Guild was formed for (and by) app-based and for-hire drivers. These were the same drivers initially protected by the IAMAW District 15.

Workers’ Compensation & Sole Proprietors

A sole proprietorship is defined as a business owned and operated by one person. As per the New York Workers’ Compensation Board, the following points apply to people who are sole proprietors of a business:

  • If a sole proprietor doesn’t have employees, they can apply for workers’ compensation coverage but are not legally required to have it.
  • If they do have employees, they are initially excluded from this coverage. However, they can have themselves “elected” to be covered. In order for this to happen, the sole proprietor would have to file a C-105.32 with the insurance carrier.
  • A sole proprietor would be considered an employer.  If they choose to hire individuals to work for their business, need to have themselves elected out of the coverage they are currently under (if they are insured). This is different than a person hiring an independent contractor for a service. The individual seeking the service is not considered to be the employer of the person providing the service.

Etsy, an online marketplace, allows individuals to buy and sell various handmade and vintage goods. It started 12 years ago and had a reported 10-1 ratio of buyers to sellers at the end of 2014. This service is massively popular and is a great way for an individual to start their own business. Since sellers on the website are not “employed” by Etsy, who should they turn to if they get hurt while creating goods for their shop? This is a rather important topic if one considers the massive uprising of entrepreneurial businesses in general, not just online marketplaces. If someone has such success with their sole proprietorship or entrepreneurship that it becomes their main source of income, they should absolutely apply for workers’ compensation insurance. Mainly due to the fact that personal health insurance is not obligated to cover accidents that happen as a result of work, or in a workplace. Hospitals also typically ask how the injury happened. If a carpenter who owns their own business is building something for a paying customer and sustains a nasty injury, they wouldn’t need to pay out of pocket for their medical care. They would also get compensated for time lost from working on the goods they build or services they provide. If a persons’ entrepreneurial venture stands for the lion’s share of their income, this would be particularly important. According to an article on the Forbes website, linked below, the number of single-person businesses jumped nearly 4% between 2013 and 2014.

The standards for sole proprietorship and workers’ compensation are determined at the state level, so this could differ from one state to another. If you are a sole proprietor and are seeking workers’ compensation, make sure to check with your state’s workers’ compensation system!

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